A freight train carrying iron ore winds through the West Pilbara region. Image: Fortescue Metals Group Ltd.

Asian-American Consortium Collaborate on Australian Iron Ore Project

Korea Australia China

A consortium of Asian and American companies have joined together to undertake an ambitious iron ore development venture in Australia’s West Pilbara region. The West Pilbara Iron Ore Project brings together American Metals & Coal International (AMCI), South Korea’s POSCO, China’s state-owned Baosteel, and Aurizon, Australia’s largest commercial freight operator, in an infrastructure framework agreement worth $7 billion.

The syndicate, known as the Australian Premium Iron Joint Venture, plans to develop the region in Western Australia to begin exporting premium quality iron ore by the end of 2017. After more than one year of negotiations, the joint venture will be co-owned by AMCI (in collaboration with POSCO) and Aquila Resources, which was recently taken over by Aurizon and Baosteel.

Aurizon and Baosteel initially won the rights to build the port and rail infrastructure for the region in 2013 after the $1.4 billion takeover, with AMCI and POSCO joining the venture in 2014. The first stages of the project will involve developing a new deep-water port at Anketell, near Perth, in addition to a new 174 mile railway to support the export of 40 million tons of iron ore per year.

All of the companies involved are global leaders in the resource and steel sectors. Despite a fall in the price of iron ore in recent weeks, the companies remain committed to the success of the venture. The West Pilbara Iron Ore Project represents a new phase of economic investment in Australia, much of which is based on deepening trade relations with other Asian nations.

Investment from the United States, particularly in the mining sector, has also been significant – US direct investment in Australia reached $131 billion in 2012, accounting for 23.9% of Australia’s total FDI. This amount was significantly larger than any other nation, and reinforces the continued importance of American investment in the region.

Jonathan Gordon recently graduated from the University of Sydney and is a Research Intern at the East-West Center in Washington, D.C.